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On May 23-24, following the Days of the International Academy of Education held earlier this week, the General Assembly of the International Academy of Education took place at HSE University Moscow. The assembly brings together education researchers and experts from all over the world, and this is the first time that the biannual meeting was held in Russia. Over the course of two days, members discussed joint projects and publications and met newly inducted members who had the opportunity to introduce themselves and present their research. Members also took part in small group discussions on a variety of topics, including digital literacy and math education.

The results of recent study conducted by the NASA Lunar Reconnaissance Orbiter, the agency’s automatic interplanetary station, show the existence of a ‘permafrost’ near the poles of the Moon with a relatively high content of water ice (up to 5% by weight). It is believed that water ice could supply a life support system for the future Russian Lunar Station and that it could also produce hydrogen-oxygen fuel for flights into deep space.

The HSE Centre for Studies of Income and Living Standards studied the dynamics of the middle class and its behaviour with regard to paid services. The study was based on data drawn from the HSE Russian Longitudinal Monitoring Survey (RLMS-HSE) for the years 2000 to 2017, and the results were presented at the 20th April International Academic Conference hosted by HSE.

Article

Importance. Loan-to-value, LTV ratio, is applied in three dimensions. First, LTV as a measure of leverage, helpful to understand the spread of systemic risk in the economy. Second, we identify LTV throughout financial covenants to analyze loan’s counterparties behavior, so as testing LTV’s ability to cope with moral hazard and adverse selection problems. Finally, we implement LTV to indicate one of the credit risk component, the probability of default, to examine specific features of risk management withal to the pricing of secured loans.

Methods. To do the research, econometric methods are implemented, linear regressions and binary models, in particular.

Results. The prevalence of ex-post theory for collateral as adjusted financial covenant has been proved for Russian banks corporate loans. Determinants of collateral constraint (particularly, LTV ratio) are to be dynamically setup, that is served as a key advantage of adjusted financial covenants. The higher credit risks, the higher collateral requirements to pledge the loans.

Conclusion. The new approach to identify collateral requirements, throughout LTV measures, as adjusted financial covenants, is presented on the Russian market. The evidence of correspondence between Russian and international experience is presented by empirical tests. Interestingly is that lender’s preferences are being stronger at the time of downturns in economic activity, while economic growth neutralizes any visible behavioral favors/patterns. Hereby psychological risk components are quite essential, and should be profoundly explored in modern banking.

The paper presents a review of stochastic framework for term structure modeling and shows comparative advantages of commonly used techniques. The main application of the research is coherent modeling of credit and interest rate risk for Euro zone issuers.

This paper investigates the relationship between operating cost efficiency and the loan quality of Russian banks. It tries to answer the question whether it is always beneficial for banks to be highly cost efficient (the “bad management” hypothesis) or whether this higher cost efficiency could mean inadequate spending on borrower screening, which could subject banks to higher credit risk exposures in the future (the “skimping” hypothesis)? Our main result implies that, while the “bad management” hypothesis holds on average for the banking sector as a whole, the “skimping” hypothesis could be the case for those Russian banks that are not just highly cost efficient, as predicted by Berger and DeYoung (1997) for US banks, but that at the same time pursue aggressive strategies in the market for loans to households and non-financial firms, especially during the pre-crisis periods when banks are too optimistic to pay increased attention to the quality of borrowers in order to extract higher profits in the short run. Interestingly, we show that the “skimping” strategy is not the case for those Russian banks that demonstrate a lower equity-to-assets ratio and that are highly cost efficient at the same time because, as we believe, higher financial leverage forces these banks to filter out low quality borrowers to be able to repay borrowed funds. From perspective of regulatory policy, these conclusions provide clear arguments in favor of differential prudential regulation in Russia, which could, if being implemented, positively affect the loan quality of both banks that are skimpers (through restricting loans growth by higher capital adequacy requirements and/or increased payments to the Russian Deposit Insurance Agency) and banks that are not (through eliminating incentives to grow too fast), thus improving the stability of the banking sector as a whole.

In textbook the main issues connected with organization of credit analysis in a commercial bank were considered. The role of credit analysis in risk management system is shown. The methodology and specific methods for assessing the creditworthiness of borrowers used by banks are set out by complex approach. The textbook includes international recommendations for introduction of internal credit risk assessment systems in banks. With the aim at presenting the material examples from the practice of commercial banks, analytical tables, diagrams and figures were used.

In this paper we develop a joint non-parametric approach to the problem of the decomposition of bond yields and CDS spreads. The proposed approach is essentially an infinite-dimensional modification of the Heath-Jarrow-Morton framework and is general enough to capture even very non-trivial shapes of the yield and hazard-rate curves. The approach allows us to jointly estimate entire term structures of yields, hazard rates, and liquidity premiums, no matter what shapes they take. We apply the developed methodology to data on major Eurozone sovereign borrowers and consider the most recent period of the Eurozone debt crisis. Our data set includes instruments with maturities from 6 months to 30 years. As a result, we found several interesting interaction effects between those components in terms of term structure. Treating the bond-CDS basis as a measure of the cross-market liquidity spread, we find that cross-market liquidity evolves in a rather non-trivial and pronounced manner. As the credit quality of the reference entity deteriorates, the liquidity of the CDS market dries up, starting from longer terms.

The paper considers the financial choice of entrepreneurs at their initial stage of development as a key criterion of a new firm potential riskiness. The main objective of the research is the methodology elaboration aimed at the numerical estimation of the role of informal financial resources involved in the small business creation. Two fundamental considerations have been tested. The former implies that informal investment is a substitution for unavailable formal sources, including venture capital (because of the lack of essential networks and connections with business associations). The latter performs the opposite concept of negative effects: economic reasoning discouragement and inefficient resources allocation. A special technique is introduced in order to measure the credit quality of early entrepreneurial activity and to estimate its contingency with the financial strategy. The methodology validation is realised under Global Entrepreneurship Monitor conceptual framework. The results are received for 42 countries in 2006-2007, depicting the influence of informal support on potential losses under the second consideration. As a result, informal investments are inefficient when the concentration of credit risk in the economy is rather high. Investorsђ expectations about the entrepreneurial growth of the firm are pessimistic, anticipated returns on investments are too low to be economically reasonable. The outcome leads to the irrecoverable losses, both financial (short-received profitability) and nonfinancial (decreased output, the lack of innovativeness, flexibility, and inventiveness).

The mortgage crisis that started in the U.S. in 2007 and lasted until 2009 was characterized by an unusually large number of defaults on the subprime mortgage market. As a result, it developed into a global economic recession and placed the stability of the world banking system in jeopardy. Therefore, the issues of credit risk modeling showed the shortcomings of the current credit risk practice. Truncation, or partial observability, and simultaneous equations bias causes sample selection bias. As a result, parameter estimates are biased and inconsistent. Firstly, we provide an overview of current approaches in the mortgage literature to control for the sample selection bias correction, such as the Heckman model and bivariate probit model with selection. Secondly, a review of the most significant mortgage studies discussing this problem is introduced. Specifically, different structural models, specific datasets and empirical results are regarded. In addition, we discuss such key credit risk determinants as borrower characteristics, terms of the mortgage contract, mortgage characteristics, and macroeconomic conditions. Finally, we conclude the discussion with possible research questions.

This paper examines what influences Russian households‟ decisions to save and borrow. We use the 2008 data from the 17th round of the Russia Longitudinal Monitoring Survey (RLMS-HSE). Our results show that the determinants of saving and borrowing are not only those suggested by economic theory but also include psychological and sociological considerations: smarter respondents, who are satisfied with their lives and inclined to help other people, are more likely to save. Those who enjoy stable or improving financial conditions and/or are satisfied with them are more likely to save and less likely to borrow. Financial literacy, a factor cited by institutional theory as positive for both saving and borrowing from banks, lost its significance at the onset of the financial crisis. Household income, suggested by economic theory as a basis for choosing a financial strategy, was found to have much less influence on savings and to have a positive influence on borrowing, confirming the rationing theory rather than intertemporal choice theory. Surprisingly, the fear of job loss does not make people save more, contrary to the precautionary motive.

Smoking is a problem, bringing signifi cant social and economic costs to Russiansociety. However, ratifi cation of the World health organization Framework conventionon tobacco control makes it possible to improve Russian legislation accordingto the international standards. So, I describe some measures that should be taken bythe Russian authorities in the nearest future, and I examine their effi ciency. By studyingthe international evidence I analyze the impact of the smoke-free areas, advertisementand sponsorship bans, tax increases, etc. on the prevalence of smoking, cigaretteconsumption and some other indicators. I also investigate the obstacles confrontingthe Russian authorities when they introduce new policy measures and the public attitudetowards these measures. I conclude that there is a number of easy-to-implementanti-smoking activities that need no fi nancial resources but only a political will.

One of the most important indicators of company's success is the increase of its value. The article investigates traditional methods of company's value assessment and the evidence that the application of these methods is incorrect in the new stage of economy. So it is necessary to create a new method of valuation based on the new main sources of company's success that is its intellectual capital.

The paper examines the institute of minimum wage in developed and transition economies and in a number of the developing countries. First of all the institutional mechanism of minimum wage fixing is considered. One of the sections explores the dynamics of absolute and relative levels of minimum wage. The special attention is paid to the impact of the institute of minimum wage on the labour market. The author considers the mechanism of transmission of the minimum wage increases on the employment and unemployment dynamics. The paper also contains the result of the empirical research. The experience of many countries witnesses that large increases in minimum wage levels lead to the stagnation of the employ-ment, especially of the disadvantaged groups. The negative effect is larger for the companies with higher share of labour costs and more active use of unqualified labour, that is small businesses and agricultural enterprises. One of the main conclusions is that the minimum wage is not an effective tool of the poverty reduction as the majority of the recipients live in households of average and upper average income.